Are in-house and outsourcing innovation strategies interlinked? Evidence from the European agri-food sector

The paper investigates the determinants of innovation strategies in the agri-food sector and
the potential complementarity of these strategies. Innovation strategies are distinguished as
in-house and outsourcing. The choice between strategies is motivated by transaction cost
minimization, property rights appropriation and optimization of firms’ resources and
competences. A bivariate probit model is implemented using cross-section data on 1,393
agri-food firms in seven EU countries. Results show that: decisions to innovate in-house or to
outsource are not interlinked; high quality human resources and the use of ICT influence
both the decision to innovate in-house and outsourcing, while organizational aspects,
especially those related to decision-making within the firm, are relevant only for in-house
innovation. Finally, we also find that large and internationalized firms are more likely to
innovate in-house.